Capitalism and character

Gracchi wonders: what impact does capitalism have upon our character, and capacity for virtue? I fear his answer is too pessimistic.
Certainly, I wouldn't start, as he does, from Rousseau. His idea of a "noble savage" corrupted by mercantile civilization seems almost wholly false; anthropologists now believe savages were far more vicious than modern man. Violence and cruelty, says Steven Pinker (pdf), seem to be in long-term decline.
Pinker hints at a more optimistic possibility, described by Deirdre McCloskey in this book - that perhaps the market economy actually makes us more virtuous. For example:
1. A market economy makes us richer. And this gives us the capacity to care for others, as Smith pointed out:

Before we can feel much for others, we must in some measure be at ease ourselves. If our own misery pinches us very severely, we have no leisure to attend to that of our neighbour. (Theory of Moral Sentiments part 5 ch 2)

A man will often kill to stay alive, but rarely to make his tenth million.
2. In a market, success depends upon meeting others' needs. This encourages people to ask: "what can I do for others?" That is, to consider others' wants. In commercial society, other people are potential customers. In hunter-gatherer societies, they are rivals for scarce food. 
3.  Reputations for honesty and fair-dealing are usually commercial advantages. And one way to acquire such reputations is to actually be honest.
Of course, these are only tendencies, with many exceptions. But I would wager that almost all investment bankers are more virtuous (in the sense I understand the word) than, say, African warlords.
So, here's a theory. Whilst markets promote virtue, it is hierarchies that destroy it - for example, by encouraging a competition to climb up the greasy pole and do down others. Weren't the former Soviet bloc societies less virtuous than US society?
For me, this is one attraction of left libertarianism. In cultivating markets, but opposing hierarchy, the (very) long-term effect of a left-libertarian society would be to promote virtue.

Comments

[John Angliss]

I'd like to see that last point backed up by something more than Reagan calling the Soviet Union an "Evil Empire": were individuals more virtuous under either?

[Mark Wadsworth]

Completely agree. If you think about it for a few seconds, what appears to be a blinding insight is in fact patently obvious, which unfortunately applies to most blinding insights.

[The Dancing Kid]

Capitalist organized violence and cruelty are certainly not on the decline. How do you spell A-f-g-h-a-n-i-s-t-a-n and I-r-a-q?

Iraq has suffered a virtual holocaust under the decades-long sanctions regime and under U.S. occupation. How's that for promoting virtue?

[dreamingspire]

Point 1: At ease, yes, but there is no automatic connection with not being very poor financially. There does, however, seem to be a connection between wealth inequality and the amount of selfish behaviour.

[Laban Tall]

"A man will often kill to stay alive, but rarely to make his tenth million"

Not necessarily. For some people the qualities necessary to make the first 9 may be those that mean he'll have few scruples about the way he gets the tenth. Man's capacity for greed seems pretty infinite. There are one or two people like that around, but I'm too frightened to name them.

The best solution to the problem is to "never let the people with all the money and the people with all the guns be the same people"

[Laban Tall]

Chris - have you seen Charles Murray calling for a Citizens Basic Income ?

http://www.thewelfarestatewerein.com/archives/2007/04/charles_murrays.php

"His idea, briefly, is this: that the government should give every person US$10,000 a year in place of all welfare benefits, retirement payments and healthcare. Of this, US$3,000 would have to be used to buy health insurance."

The thing that bothers me about this is that while 3K will buy a lot of health insurance for a 20yo, you won't get much at 85 with an existing condition.

[Planeshift]

"A man will often kill to stay alive, but rarely to make his tenth million"

Perhaps not in a personal manner, as in kicking someone to death outside a pub. However numerous real world examples indicate that many of the rich corporations are perfectly prepared to indirectly kill people for a further million on the balance sheet, or to protect existing profits. Eg: doing things like hiring the local paramilitaries to murder trade unionists, leave factories dangerously unsafe so that explosions can kill people, bulldoze villages so that golf courses can be built for foreign markets etc.

[chris strange]

Mr Angliss, an example:

China under Moa killed at least 70 million people. This is a vastly greater death toll than in any capitalist country, ever. But Moa did not pull the trigger personally (he did not have the time, he had a country to ruin). Since mass murder is not a virtue this means that an aweful lot of people acted less virtuosly than in the less murderous west.

[Roger Thornhill]

1) I would not describe Iraq as "capitalist organised". Oligarchy? Merchantilist? Not sure, but capitalist is too broad brushed. War creates uncertainty and that is not a good environment for (most) people to do business.

2) I agree that heirarchy is not always good, especially if it holds the purse strings. A State not issuing contracts or fatuous "permits" is not worth bribing very much. Heirarchy in large corporations creates localised politics and does not foster a healthy environment or promote the best and benign.

3) The Citizens Basic Income is very interesting (simple, fair/Rule of Law, progressive) but enforcement and immigration are issues which I do not feel will be easily resolved unless you end up with some vast DNA database.

[Planeshift]

"This is a vastly greater death toll than in any capitalist country, ever."

Depends how you count the numbers, and over what time period. Also how you define capitalism, define what situations constitute a death due to capitalism, and what situations don't etc. Hours of fun for the pedant.

[pseudonymous]

Perhaps planeshift would like to give a counter example.

This is daft. Markets require that relationships between people be voluntary, without coercion on either side.

Hierarchies almost always require that the powerful be able to coerce the powerless.

Of course people in a market based system will tend to be freer from other peoples use of force.

[Scratch]

China under Moa killed at least 70 million people.

It's a sine qua non in geopolitical circles that flightlessbirdocracy will inevitably lead to mass slaughter.

[Sam C]

"anthropologists now believe savages were far more vicious than modern man"

This is false as an account of what anthropologists believe: they're a remarkably diverse group, and Steven Pinker is not one of them (and is notorious for making sweeping pronouncements on fields he knows little about). More importantly, this claim is confused whoever believes it. There are no such homogenous groups as 'savages' or 'modern man': there are humans living out a vast and complex range of forms of life. Some of those forms are better than others, on various scales (peace, freedom, security, culture, morality, happiness, etc.). Similarly, the attempt to decide which out of 'communism' and 'capitalism' is more violent is doomed from the start, even if we were working with an actual definition of 'violence', which no-one has offered.

[Shuggy]

"Capitalist organized violence and cruelty are certainly not on the decline. How do you spell A-f-g-h-a-n-i-s-t-a-n and I-r-a-q?"

Yes they are. Iraq and Afghanistan notwithstanding, the world has become less violent since the end of the Cold War.

[John Angliss]

"Since mass murder is not a virtue this means that an aweful lot of people acted less virtuosly than in the less murderous west."

First, Maoist China was not Soviet, but I can see your drift.

Second, we are talking about virtue, not death toll. For example, 61-66% of the population of the UK are willing to kill if they are merely asked politely. (http://en.wikipedia.org/wiki/Milgram_experiment)
That in China they would do the same when whipped up into a fury by a despot does not make them any more or less virtuous per se.

[Cleanthes]

From an individual perspective, it is not so much that free markets engender virtue, it is that statist solutions DESTROY it.

If the state declares - endlessly - that it is providing everything for its citizens, there is precisely zero need for any individual to care for any other.

He can tell himself that his moral obligations to others have been discharged entirely simply by the fact that he is part of that state. This behaviour is also true in the case of our welfare state.

It is why the welfareism is so pernicious and destructive of civil society.

[Mark EJ]

Question to the economists and thinkers on this blog: is there a difference between capitalism and free markets? Can you have a successful free market without also allowing wealth hoarding and interest?

I ask as I recently read a book arguing for a demurrage (negative interest) as a means for prompting wealth creation.

Would anyone like to comment?

[reason]

Cleanthes...

But if the welfare state is also a democracy, its continuation requires continued support. Your argument is ingenious, but not convincing. And what about free-rider and unfairness arguments (not to mention the danger of dependence on individuals being exploited - ever read Dickens?)

And as for evidence - well as far as I know Charities are alive and well in welfare states. Such arguments always arouse the suspicion of being self-serving.

I tend to agree to agree with the posters who say that while aspects of capitalist culture may build positive virtues, allowing power to acrue to those who accrue vast fortunes could be a case of perverse selection. But the same is definitely true as stated with hierarchies as well. (Peter Principle!)

[Brendan Halfweeg]

General Motors and Citibank didn't invade Iraq or Afghanisatan, it was the United States and allied government's military. You can't blame the actions of a democratic government on the institution of capitalism.

[chris strange]

OK, Stalin killed 40 million. Like with Mao this a far higher body count in a shorter space of time than any capitalist country could manage. I just went for the number one killer of the twentieth century rather than the number two. That does not change the fact that under both their regimes a very large number of people acted immorally, as shown by the body count.

That under certain circumstances people in the west can also be pursuaded into thinking they are committing actions which if real would be immoral does not matter. Actions make large changes to utility, intentions or possibilities do not. Therefore only actions can be used to calculate morality and so calculate if somebody is living virtuously. Ergo the various Socialist regimes, including the Soviets, did force the people living under them to be less virtuous than their western counterparts.

[jameshigham]

Chris, I left this comment at Matt Sinclair's too:

Ho hum. Tiberius is into "soft politics" and goodness in the world and Chris has an obsession with managerialism. Quite a debate.

Capitalism simply provides incentive for the individual to work hard and to see his hard work rewarded both for himself and his family.

It is soul destroying that the fruits of his labour care being planned to be taken away by socialists and given to the undeserving.

In fact, it's wrong.

[Roger Thornhill]

reason: if the Welfare State were a true democracy, it would be a charity.

[Matt Munro]

This is daft. Markets require that relationships between people be voluntary, without coercion on either side.

Posted by: pseudonymous | April 26, 2007 at 10:12 PM

Why do all markets need salesmen then - if not to coerce you into buying things you don't need and can't afford ?? The pressure to consume is enormous and marketing is just a subtle form psycological coercion (aka brainwashing)

[reason]

Roger Thornhill...
I'm sure your answer to my post, is meant to be clever. But unfortunately, it is just obscure as far as I am concerned.